With investors already unnerved by Monday’s oil shock wipe-out, the latest news on North Korean leader Kim Jong-Un's illness dented the risk sentiment further, as the US dollar benefited from the haven demand while the Asian stocks and US equity futures flashed red.
US President Donald Trump signed an order to temporary suspend immigration into the US amidst the coronavirus crisis. The announcement also added to the risk-off market profile. The US Treasury yields remained soggy and gold bulls were intimidated by the dollar strength, as the yellow metal traded below 1700 levels.
The June contract for the barrel of WTI bounced 4% in Asia, reversing Monday’s decline while the front-month (May) contract returned to the positive territory after the meltdown.
Among the G10 currencies, the kiwi dollar crumbled after the Reserve Bank of New Zealand (RBNZ) Governor Orr agreed on the monetization of the government debt while AUD/USD dipped briefly below 0.63 on dismal Australian jobs data and dovish RBA’s April meeting minutes. USD/CAD posted small gains but remained below 1.42 amid a rebound in oil prices.
Meanwhile, USD/JPY eased to mid-107s after the yen caught a bid wave on risk-off trading. EUR/USD headed back towards 1.0800 while the cable fell and battled at 1.24 handle amid broad US dollar strength.
Main topics in Asia
Canadian Natural Resources Minister: Deeply concerned about global oil markets
Alberta’s Kenney: Federal government should take more action on oil prices
RBNZ: Proposing the removal of mortgage LVR restrictions
US Pres. Trump: Oil price drop is very short term, a lot of people got caught
NZ Finmin Robertson: Economy well placed to rebound from virus
US Treasury finalizes agreements with major airlines
RBNZ’s Orr: Again does not rule out negative rates
RBA Minutes: Will continue to do what was necessary to achieve the three-year yield target
USD/KRW Price Analysis: South Korean won crashes 1.50% on N. Korean leader’s illness
S. Korean Govt: North Korean leader Kim Jong-Un is not seriously ill
US Pres. Trump: Will sign an order temporary suspending immigration into the US
Australian PM Morrison announces to lift restrictions on elective surgery
Key focus ahead
We have a busy EUR macro calendar on Tuesday, kicking-off with the UK labor market report at 0600 GMT. The main focus will be on the March Claimant Count numbers, which are expected to jump by 172.5k due to the virus-induced lockdown impact on the UK economy. The wage growth and jobless rate are for February and may not have much market impact.
At the same time, the Swiss Trade Balance report will be published. Later on, at 0900 GMT, the critical German and Eurozone ZEW Business sentiment survey will be published. The EUR is unlikely to find any support from the ZEW survey.
In the NA session, the Canadian Retail Sales and US Existing Home Sales data will keep the traders busy while New Zealand’s (NZ) GDT Price Index and API Weekly Crude Oil Stock data will be also closely eyed.
Meanwhile, incoming oil-related developments and virus news will continue to hog the limelight.
EUR/USD: Dollar may remain bid on oil price crash
EUR/USD suffered losses in Asia and could continue to lose ground in Europe, as uncertainty triggered by Monday's oil price crash is likely to keep the US dollar better bid.
When are the UK jobs and how could they affect GBP/USD?
The GBP/USD pair’s gradual weakness towards revisiting a 21-day SMA level of 1.2355 recently gains additional strength from the pair’s drop to the eight-day low, while also waiting for the key UK data. The number of people seeking jobless benefits is likely to jump by 172.5K in March.
UK Jobless Claims Preview: Tenfold leap may be too modest, GBP/USD has room to fall
Economists forecast a leap of 172.5 in UK jobless claims in March. The figures may understate the real damage from coronavirus. GBP/USD has room to the downside in most cases.
German ZEW Preview: Less bad doesn’t mean good, no chances for EUR
Business Sentiment in the Union crashed in March, slightly improvement expected. German’s plans to re-open the economy still too conservative. EUR/USD technically neutral, closer to break below the 1.0800 threshold.
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